Topline
Meta shares dropped by more than 12% as trading opened Thursday, pacing what would be the company’s largest single-day loss in years after a nearly $16 billion tax charge lowered its quarterly earnings well below Wall Street’s forecasts.
Earnings fell significantly below Wall Street’s expectations, though Meta said it would have exceeded projections before the tax charge.
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Key Facts
Shares of Meta fell 12.3% to around $658.50 after the bell rang Thursday morning, the largest intraday loss for the stock since a 24.5% decline in October 2022.
Meta on Wednesday reported third-quarter earnings per share of $1.05, 84% below economists’ projections of $6.72, according to FactSet, despite revenue of $51.2 billion, above estimates of $49.5 billion.
The 83% dip in EPS over the previous year ($6.03) was marked by a one-time tax charge of $15.9 billion because of President Donald Trump’s One Big Beautiful Bill Act, Meta said, noting it expects a “significant reduction” in its U.S. federal cash tax payments for the rest of 2025 and future years.
Without the tax charge, Meta said earnings per share would have been $7.25.
The company raised its guidance for capital expenditures from between $66 billion and $72 billion to between $70 billion and $72 billion, as CEO Mark Zuckerberg said the company is “aggressively” preparing for the arrival of superintelligence, which Zuckerberg said Meta would be “ideally positioned for a generational paradigm shift in many large opportunities.”
Meta’s Reality Labs unit, responsible for developing the company’s VR headsets and AI smart glasses with Ray-Ban and Oakley, recorded an operating loss of $4.4 billion after generating $470 million in sales, just ahead of Wall Street’s expectations that the division would lose $5.1 billion on $316 million in revenue.
Microsoft Stumbles After Reporting Earnings—while Alphabet Rises
Microsoft shares decreased 2.2% to around $529.40 after reporting better-than-expected quarterly results on Wednesday. Microsoft posted earnings per share of $4.13 and revenues totaling $77.6 billion, surpassing forecasts of $3.67 and $75.4 billion, according to FactSet. Microsoft also reported a jump in cloud revenue, rising 28% year-over-year to $30.9 billion. A stock decline for Microsoft appeared to be linked to the company reporting a $3.1 billion hit to net income through the quarter because of its investment in OpenAI, which equated to a loss of $0.41 per share. Alphabet, unlike its “Magnificent Seven” partners, rose 2.7% after its earnings report Wednesday. The quarterly report was headlined by Alphabet’s revenues crossing $100 billion for the first time, hitting $102.3 billion while above estimates of $99.9 billion.
What To Watch For
Apple and Amazon will report earnings after market close Thursday. Apple is projected to report earnings per share of $1.78 and $102.2 billion in revenues, while Amazon is expected to post EPS of $1.57 and $177.9 billion in revenues. Nvidia will be the last of the “Magnificent Seven” to post earnings, with a quarterly report scheduled for Nov. 19.
Key Background
Meta, whose shares are up 10% this year despite Thursday’s slide, has spent billions in recent years as more companies shift to meet growing demand for AI. Meta invested $14.3 billion in the AI startup Scale AI earlier this year and hired its CEO, Alexandr Wang, to lead Meta’s AI initiative, Superintelligence Labs. The company has also reached several cloud deals in recent weeks to build its AI infrastructure, including a six-year, $10 billion deal inked with Google in August.
Further Reading
Source: https://www.forbes.com/sites/tylerroush/2025/10/30/meta-shares-drop-12-after-trumps-megabill-casts-16-billion-tax-charge/
